(LifeSiteNews) — With almost eight months left to run in 2023, this year’s banking collapses already eclipse those of the financial crisis of 2008 – and 2009 – combined.
According to a piece by Michael Snyder, published on May 1 in Zerohedge:
Collectively, the three big banks that have collapsed in 2023 had more assets than all 25 banks that collapsed in 2008 did.
Three down – more to go?
The Federal Deposit Insurance Corporation (FDIC) published detailed figures of every failed bank in the U.S. since the year 2000. It acts as receiver for ruined banks, assuming some of their liabilities with tax payer funded purchase agreements and guarantees.
Signature Bank, New York, NY and Silicon Valley Bank, Santa Clara, CA collapsed in March 2023, joined by First Republic Bank, San Francisco on May 1.
These collapses were caused by capital flight – a fancy term for a bank run. Despite the reassurances of the management, this is not a minor crisis limited to a few bad apples. The tree is rotten from the roots.
What is a bank run?
Money follows confidence. When a bank loses credibility, depositors withdraw their money. Once begun, this process cannot be legally halted.
At present, confidence in banks is falling all over the West.
A looming disaster?
The crisis in banking is both international and highly likely to spread. In research published in March 2023, four analysts concluded that at least 200 U.S. banks with assets over a massive $300 billion are in danger of collapse.
Even if only half of uninsured depositors decide to withdraw, almost 190 banks with assets of $300 billion are at a potential risk of impairment, meaning that the mark-to-market value of their remaining assets after these withdrawals will be insufficient to repay all insured deposits.
Alongside the fragility of the banks and the likelihood (high) of a series of bank runs, the paper highlights the precise vulnerability of the U.S. banking sector. It would take only a minor drop in depositor confidence for all these dominoes to fall. What is worse, if a bank run begins in these 200 institutions, it is likely to lead to a far greater crisis:
If deposit withdrawals cause even small fire sales, substantially more banks are at risk. Regions with lower household incomes and large shares of minorities are more exposed to the bank risk. [emphasis added]
Overall, the outlook for the U.S. banking sector looks dire.
We also show that decline in banks’ asset values eroded the ability of banks to withstand adverse credit events – focusing on commercial real estate loans. Overall, these calculations suggest that recent declines in bank asset values very significantly increased the fragility of the U.S. banking system to uninsured depositor runs.
The lesson here is precisely how thoughts, suspicions and rumors can collapse an economy based on a false promise. In this case, it is careful talk which costs lives – the lives of reckless banks.
Europe takes a ‘bank walk’?
Reuters reports that billions have been withdrawn from U.K. and European banks by depositors, fearing a repeat of the meltdown of Credit Suisse. The crisis in confidence is not limited to the USA.
“Europeans drain billions from banks, fed up with shrinking savings,” said the May 4 report.
Four major banks in Britain reported losses from two to eleven billion pounds over the first three months of 2023, with German and French deposits showing falls of up to 8 percent.
A novel and jolly phrase has been supplied to describe this capital flight, by the very banks whose business it is – literally – to tell you lies in order to keep your money.
The trend emerged as some of the region’s biggest lenders outlined a profitable start to the year in results that also offered a glimpse of a phenomenon dubbed a “bank walk” – a slow but notable outflow of customer cash.
The right to withdraw your money – despite the grinning reassurances of hawkers – is of course one which may not be supported by the terms and conditions of the regime for much longer. For as long as it survives, expect to hear economic meltdown repackaged in a number of comforting ways.
Information warfare in play
The practice of information warfare is universally degrading. Both the banks and President Joe Biden have reassured the public there is no cause for concern. These remarks must be understood in the context that rumors – especially of the truth – can be fatal to confidence in banks.
The truth of the matter is that printing money backed by promises on debt is a fools’ bargain – for the populations who pay for it.
It is astonishing to see the West once again threatened by a major financial crisis. The recent excesses in government borrowing – for war, economic “stimulus” and under the tragic demolition of liberty that was lockdown do not shoulder all the blame.
The debt-based system has been at work in the USA for over a century. The practice of lending money at interest is the cause of this crisis – and many others – which plague our mass society.